I-3, r. 2 - Mandatory Transaction Disclosure Regulation

Schedule Disposition versions

2024-05-29

SCHEDULE A

(ss. 1079.8.1 and 1079.8.6.3)

TRANSACTION 1

AVOIDANCE OF DEEMED DISPOSAL OF TRUST PROPERTY

A transaction that includes the following facts is hereby determined by the Minister:

(a) a trust is resident in Québec at any time in the course of the transaction;

(b) the trust holds at that time a particular property that is a capital property or land included in the inventory of a business of the trust;

(c) the particular property is not exempt property;

(d) at a particular time in the course of the transaction, the trust distributes the particular property and is deemed to dispose of it for proceeds of disposition that are less than its fair market value immediately before that time;

(e) the disposition referred to in subparagraph d results in the trust not being deemed to dispose of the particular property under section 653 of the Act at the end of a day described in any of subparagraphs a to c of the first paragraph of that section 653, nor to reacquire the particular property immediately after that day; and

(f) after the particular time referred to in subparagraph d, a trust holds, directly or indirectly, the particular property or another property whose fair market value is derived, directly or indirectly, from the particular property, or so holds property substituted for the particular property or for the other property, as the case may be.

A trust that is a party to a specified transaction in relation to a transaction referred to in the first paragraph is required to disclose the specified transaction.

The obligation to disclose the specified transaction applies as of the day that includes the particular time referred to in subparagraph d of the first paragraph.

TRANSACTION 2

PAYMENT TO A NON-TREATY COUNTRY

A transaction that includes the following facts is hereby determined by the Minister:

(a) a particular person or a particular partnership in respect of which any of the following conditions is met is a party to the transaction:

i. in the case of a person, the person is subject to tax under Part I of the Act for a particular taxation year in which the transaction occurs;

ii. (subparagraph revoked);

iii. in the case of a partnership, each member of the partnership is required, under section 1086R78 of the Regulation respecting the Taxation Act (chapter I-3, r. 1), to file an information return for a particular fiscal period of the partnership in which the transaction occurs;

(b) (subparagraph revoked);

(c) another person that is not resident in Canada and with whom the particular person or the particular partnership or a member of the particular partnership, as the case may be, does not deal at arm’s length in the particular taxation year or particular fiscal period, as the case may be, or another partnership of which such other person is a member, is a party to the transaction, if

i. the other person at any time in the particular taxation year or particular fiscal period, as the case may be, is resident in a country with which the Government of Québec or of Canada at that time has not entered into a tax agreement; or

ii. the other partnership at any time in the particular taxation year or particular fiscal period, as the case may be, carries on a business in a country with which the Government of Québec or of Canada at that time has not entered into a tax agreement; and

(d) the particular person or the particular partnership deducts in computing income under Part I of the Act for the particular taxation year or particular fiscal period, as the case may be, a particular amount paid or payable to another person or another partnership referred to in subparagraph c, other than an amount paid or payable as consideration for the acquisition of corporeal property.

For the purposes of subparagraph c of the first paragraph, a person resident in a dependency, possession, department, protectorate or region of a country with which the Government of Québec or of Canada has entered into a tax agreement and to which the provisions of the tax agreement do not apply is considered to be resident in a country with which the Government of Québec or of Canada has not entered into a tax agreement.

For the purposes of the first paragraph, a person that is a member of a partnership that itself is a member of another partnership is deemed to be a member of that other partnership.

The particular person or the members of the particular partnership are required to disclose a specified transaction in relation to a transaction referred to in the first paragraph if the aggregate of all amounts, each of which is an amount meeting the following conditions, is at least equal to $1,000,000:

(a) it is a particular amount referred to in subparagraph d of the first paragraph; and

(b) it is deducted:

i. by the particular person or particular partnership in computing income for the particular taxation year or particular fiscal period, as the case may be; or,

ii. if the particular person or particular partnership is a member of an associated group in the particular taxation year or particular fiscal period, as the case may be, by another member of the associated group in computing income for that member’s taxation year or fiscal period that ends in the particular taxation year or particular fiscal period.

The obligation to disclose the specified transaction applies as of the day that is 60 days before the particular person’s filing due-date for the person’s particular taxation year or before the filing due-date of the member of the particular partnership for the member’s taxation year in which the particular fiscal period ends, as the case may be.

TRANSACTION 3

MULTIPLICATION OF THE CAPITAL GAINS DEDUCTION

A transaction that includes the following facts is hereby determined by the Minister:

(a) an individual subject to tax under Part I of the Act, a trust or a partnership disposes of a share of the capital stock of a Canadian-controlled private corporation;

(b) the share is a qualified small business corporation share;

(c) in respect of the disposition, the individual deducts an amount under section 726.7.1 of the Act in computing taxable income for a taxation year; and

(d) either of the following conditions is met:

i. the individual transfers or loans, directly or indirectly, in any manner whatever, including by means of a trust or a corporation, or by repayment of existing indebtedness, an amount that may reasonably be considered to be, directly or indirectly, part or all of the proceeds of the disposition of the share, to either

(1) a particular person that is a shareholder of the corporation referred to in subparagraph a or would be such a shareholder if section 21.18 of the Act applied and were read without reference to “specified”, wherever that term appears, or that was previously such a shareholder of the corporation; or

(2) a person that does not deal at arm’s length with the particular person; or

ii. the individual acquired a share of a person who is the individual’s spouse as part of a transfer referred to in section 454 of the Act and a valid election under the second paragraph of that section 454 was made by the individual’s spouse, with the result that the provisions of section 454 do not apply to the transfer.

For the purposes of the first paragraph, an individual who expressly or implicitly undertook to transfer or loan part or all of the proceeds of the disposition of a share is deemed to have made the transfer or loan at the time of the undertaking.

The individual referred to in subparagraph c of the first paragraph is required to disclose a specified transaction in relation to a transaction referred to in the first paragraph.

The obligation to disclose the specified transaction applies as of,

(a) if subparagraph i of subparagraph d of the first paragraph applies and:

i. the day of the transfer or loan is before the day on which the share referred to in subparagraph a of that paragraph is disposed of, the day of the disposition; or

ii. the day of the transfer or loan is the day on which the share referred to in subparagraph a of that paragraph is disposed of or is later than that day, the day of the transfer or loan; or

(b) if subparagraph ii of subparagraph d of the first paragraph applies, the day on which the share referred to in that subparagraph ii is acquired.

TRANSACTIONS 4

TAX ATTRIBUTE TRADING

The following transactions are hereby determined by the Minister:

(a) a transaction in relation to a tax attribute, contemplated by the definition of “attribute trading restriction” in section 21.4.2.1 of the Act, that is generated in respect of a taxpayer, referred to in this subparagraph as the “initial taxpayer”, other than a tax-exempt taxpayer, as part of the transaction or before the beginning of the transaction, if the transaction includes the following facts:

i. a particular taxpayer is subject to tax under Part I of the Act at a particular time in the transaction; and

ii. the particular taxpayer uses the tax attribute generated in respect of the initial taxpayer;

(b) a transaction in relation to a tax attribute, contemplated by the definition of “attribute trading restriction” in section 21.4.2.1 of the Act, that is generated in respect of a corporation or a trust, referred to in this subparagraph as the “specific taxpayer”, other than a tax-exempt taxpayer, as part of the transaction or before the beginning of the transaction, if the transaction includes the following facts:

i. a person or a partnership, referred to as the “purchaser” in this paragraph and in the fourth paragraph, acquires, directly or indirectly in any manner whatever:

(1) if the specific taxpayer is a corporation, a share of the capital stock of the specific taxpayer or a right referred to in paragraph b of section 20 of the Act relating to such a share; or

(2) if the specific taxpayer is a trust, a capital interest or an income interest in the specific taxpayer or a right, whether immediate or future and whether absolute or contingent, to such an interest;

ii. the specific taxpayer is subject to tax under Part I of the Act at a particular time in the transaction;

iii. the specific taxpayer uses the tax attribute;

iv. if the specific taxpayer carried on a business before the beginning of the transaction, any of the following conditions is met:

(1) the specific taxpayer ceases to carry on the business or begins to carry on a new business as part of the transaction;

(2) the specific taxpayer, in the course of the transaction, earns income from property the taxpayer acquired as part of the transaction, or held immediately before the beginning of the transaction and was not using to earn income from property at that time; or

(3) the specific taxpayer realizes a capital gain from the disposition of property acquired as part of the transaction;

v. the use of the tax attribute to which subparagraph iii refers is one of the results derived, directly or indirectly, from the acquisition by the purchaser of the share, the right to a share, an interest or the right to an interest referred to in subparagraph i, or from the transfer or loan of property to the specific taxpayer, as part of the transaction, by the purchaser or by a person or partnership with which the purchaser does not deal at arm’s length at the time of the transfer or loan.

For the purposes of subparagraph ii of subparagraph a of the first paragraph and subparagraph iii of subparagraph b of that paragraph, a taxpayer that is a member of a partnership that generates or uses a tax attribute is deemed to generate or use the tax attribute.

For the purposes of subparagraph a of the first paragraph, “tax-exempt taxpayer” means

(a) a taxpayer in respect of which section 21.0.6 of the Act applies in the course of the transaction in relation to the tax attribute referred to in that subparagraph a; and

(b) a taxpayer with which the particular taxpayer is affiliated throughout the period that begins immediately before the beginning of the transaction and ends at the time of the last use of the tax attribute in connection with the transaction.

For the purposes of subparagraph b of the first paragraph, “tax-exempt taxpayer” means:

(a) a taxpayer in respect of which section 21.0.6 of the Act applies in the course of the transaction in relation to the tax attribute referred to in that subparagraph b;

(b) a taxpayer with which each of the purchasers is affiliated throughout the period that begins immediately before the beginning of the transaction and ends at the time of the last use of the tax attribute in connection with the transaction.

For the purposes of subparagraph b of the third and fourth paragraphs, the following rules apply:

(a) a corporation, trust or partnership that is constituted or begins to exist, otherwise than by reason of an amalgamation or merger, at a particular time as part of the transaction is deemed to have existed throughout the period that begins immediately before the beginning of the transaction and ends at the time immediately preceding the particular time and to have had throughout that period the same shareholders, beneficiaries or members, as the case may be, as those it has at the particular time, those shareholders, beneficiaries or members being deemed to hold, throughout that period, the shares of the capital stock of the corporation, interests in the trust or in the partnership, as the case may be, they hold at the particular time;

(b) where, at a particular time, 2 or more particular corporations amalgamate or merge to form a new corporation and the new corporation and the particular corporations would have been affiliated with each other throughout the period that begins immediately before the beginning of the transaction and ends at the time immediately preceding the particular time, if, throughout that period, the new corporation had existed and had had the same shareholders as those it has at the particular time, the new corporation is deemed to have existed throughout that period and to have had, throughout that period, the same shareholders as those it has at the particular time, those shareholders being deemed to hold, throughout that period, the shares of the capital stock of the corporation they hold at the particular time;

(c) section 21.0.4 of the Act does not apply.

The particular taxpayer referred to in subparagraph a of the first paragraph is required to disclose a specified transaction in relation to a transaction referred to in that subparagraph a.

The specific taxpayer, within the meaning of subparagraph b of the first paragraph, is required to disclose a specified transaction that relates to a transaction referred to in that subparagraph b.

The obligation to disclose the specified transaction in relation to a transaction referred to in subparagraph a of the first paragraph applies as of the day that is 60 days before the particular taxpayer’s filing due-date for the first taxation year in respect of which the particular taxpayer uses the tax attribute referred to in that subparagraph a.

The obligation to disclose the specified transaction in relation to a transaction referred to in subparagraph b of the first paragraph applies as of the day that is 60 days before the specific taxpayer’s filing due-date for the first taxation year in respect of which the specific taxpayer uses the tax attribute referred to in that subparagraph b.

TRANSACTION 5

AVOIDANCE OF DEEMED INTEREST RULE UNDER SECTION 462.12 OF THE ACT THROUGH A STOCK DIVIDEND

A transaction that includes the following facts is hereby determined by the Minister:

(a) a stock dividend is declared, at a particular time in the course of the transaction, in respect of a share that an individual, subject to tax under Part I of the Act for a taxation year that includes the particular time, holds, directly or indirectly, in any manner whatever, in the capital stock of a corporation;

(b) the fair market value of the share or shares issued or to be issued as the stock dividend is greater than the amount by which the paid-up capital of the shares of the corporation is increased, by reason of the payment of the dividend; and

(c) subject to the second paragraph, in the course of the transaction, any of the following conditions is met:

i. the individual transfers, directly or indirectly, in any manner whatever, a share of the capital stock of the corporation that includes the right to receive the remaining property of the corporation on liquidation and a designated person, in respect of the individual, holds a share of the capital stock of the corporation;

ii. a designated person, in respect of the individual, acquires, directly or indirectly, in any manner whatever, a share of the capital stock of the corporation;

iii. a designated person, in respect of the individual, holds, directly or indirectly, in any manner whatever, a share of the capital stock of the corporation, other than a share of the single class of shares of the capital stock of the corporation that are issued and include the right to receive the remaining property of the corporation on liquidation, that gives the right to receive

(1) a discretionary dividend; or

(2) a dividend in an amount, when considered on an annual basis, that is not reasonable in the circumstances; or

iv. a designated person, in respect of the individual, holds, directly or indirectly, in any manner whatever, a share of a class of the capital stock of the corporation the terms or conditions of which have been modified through a change to the corporation’s articles, the fulfilment of a suspensive condition or in any other manner, so that

(1) the right to receive a dividend of the corporation or to receive the remaining property of the corporation on liquidation is created; or

(2) the amount of the dividend declarable by the corporation in respect of the share or the proportion of the property of the corporation receivable on liquidation under the right given by the share, is increased.

For the purposes of subparagraph c of the first paragraph, subparagraphs i to iv of that subparagraph c, as applicable, apply to the designated person, in respect of the individual, only if the person is a specified shareholder of the corporation at any time in the course of the transaction.

A transaction referred to in the first paragraph is not a determined transaction as the result of the application of any of subparagraphs i to iv of subparagraph c of the first paragraph, if the conditions set out in paragraphs a to c of section 462.12.1 of the Act are met in respect of the designated person to which the relevant subparagraph of that subparagraph c applies.

For the purposes of this section,

(a) “designated person” has the meaning assigned by section 462.7 of the Act;

(b) “specified shareholder” has the meaning that would be assigned by section 21.17 of the Act if the reference in that section to “any other corporation that is related to the corporation” were read as a reference to “any other corporation, other than a small business corporation, that is related to the corporation”, and section 21.18 of the Act were read without reference to its paragraphs a and d.

The individual referred to in subparagraph a of the first paragraph is required to disclose a specified transaction in relation to a transaction referred to in the first paragraph.

The obligation to disclose the specified transaction applies as of the day on which the stock dividend referred to in subparagraph a of the first paragraph is declared.

M.O. 2021-03-03, Sch. A; M.O. 2022-06-15, ss. 2, 3 and 4; M.O. 2024-05-10, s. 1.

2022-06-29

SCHEDULE A

(ss. 1079.8.1 and 1079.8.6.3)

TRANSACTION 1

AVOIDANCE OF DEEMED DISPOSAL OF TRUST PROPERTY

A transaction that includes the following facts is hereby determined by the Minister:

(a) a trust is resident in Québec at any time in the course of the transaction;

(b) the trust holds at that time a particular property that is a capital property or land included in the inventory of a business of the trust;

(c) the particular property is not exempt property;

(d) at a particular time in the course of the transaction, the trust distributes the particular property and is deemed to dispose of it for proceeds of disposition that are less than its fair market value immediately before that time;

(e) the disposition referred to in subparagraph d results in the trust not being deemed to dispose of the particular property under section 653 of the Act at the end of a day described in any of subparagraphs a to c of the first paragraph of that section 653, nor to reacquire the particular property immediately after that day; and

(f) after the particular time referred to in subparagraph d, a trust holds, directly or indirectly, the particular property or another property whose fair market value is derived, directly or indirectly, from the particular property, or so holds property substituted for the particular property or for the other property, as the case may be.

A trust that is a party to a specified transaction in relation to a transaction referred to in the first paragraph is required to disclose the specified transaction.

The obligation to disclose the specified transaction applies as of the day that includes the particular time referred to in subparagraph d of the first paragraph.

TRANSACTION 2

PAYMENT TO A NON-TREATY COUNTRY

A transaction that includes the following facts is hereby determined by the Minister:

(a) a particular person or a particular partnership in respect of which any of the following conditions is met is a party to the transaction:

i. in the case of a person, the person is subject to tax under Part I of the Act for a particular taxation year in which the transaction occurs;

ii. (subparagraph revoked);

iii. in the case of a partnership, each member of the partnership is required, under section 1086R78 of the Regulation respecting the Taxation Act (chapter I-3, r. 1), to file an information return for a particular fiscal period of the partnership in which the transaction occurs;

(b) (subparagraph revoked);

(c) another person that is not resident in Canada and with whom the particular person or the particular partnership or a member of the particular partnership, as the case may be, does not deal at arm’s length in the particular taxation year or particular fiscal period, as the case may be, or another partnership of which such other person is a member, is a party to the transaction, if

i. the other person at any time in the particular taxation year or particular fiscal period, as the case may be, is resident in a country with which the Government of Québec or of Canada at that time has not entered into a tax agreement; or

ii. the other partnership at any time in the particular taxation year or particular fiscal period, as the case may be, carries on a business in a country with which the Government of Québec or of Canada at that time has not entered into a tax agreement; and

(d) the particular person or the particular partnership deducts in computing income under Part I of the Act for the particular taxation year or particular fiscal period, as the case may be, a particular amount paid or payable to another person or another partnership referred to in subparagraph c, other than an amount paid or payable as consideration for the acquisition of corporeal property.

For the purposes of subparagraph c of the first paragraph, a person resident in a dependency, possession, department, protectorate or region of a country with which the Government of Québec or of Canada has entered into a tax agreement and to which the provisions of the tax agreement do not apply is considered to be resident in a country with which the Government of Québec or of Canada has not entered into a tax agreement.

For the purposes of the first paragraph, a person that is a member of a partnership that itself is a member of another partnership is deemed to be a member of that other partnership.

The particular person or the members of the particular partnership are required to disclose a specified transaction in relation to a transaction referred to in the first paragraph if the aggregate of all amounts, each of which is an amount meeting the following conditions, is at least equal to $1,000,000:

(a) it is a particular amount referred to in subparagraph d of the first paragraph; and

(b) it is deducted:

i. by the particular person or particular partnership in computing income for the particular taxation year or particular fiscal period, as the case may be; or,

ii. if the particular person or particular partnership is a member of an associated group in the particular taxation year or particular fiscal period, as the case may be, by another member of the associated group in computing income for that member’s taxation year or fiscal period that ends in the particular taxation year or particular fiscal period.

The obligation to disclose the specified transaction applies as of the day that is 60 days before the particular person’s filing due-date for the person’s particular taxation year or before the filing due-date of the member of the particular partnership for the member’s taxation year in which the particular fiscal period ends, as the case may be.

TRANSACTION 3

MULTIPLICATION OF THE CAPITAL GAINS DEDUCTION

A transaction that includes the following facts is hereby determined by the Minister:

(a) an individual subject to tax under Part I of the Act, a trust or a partnership disposes of a share of the capital stock of a Canadian-controlled private corporation;

(b) the share is a qualified small business corporation share;

(c) in respect of the disposition, the individual deducts an amount under section 726.7.1 of the Act in computing taxable income for a taxation year; and

(d) either of the following conditions is met:

i. the individual transfers or loans, directly or indirectly, in any manner whatever, including by means of a trust or a corporation, or by repayment of existing indebtedness, an amount that may reasonably be considered to be, directly or indirectly, part or all of the proceeds of the disposition of the share, to either

(1) a particular person that is a shareholder of the corporation referred to in subparagraph a or would be such a shareholder if section 21.18 of the Act applied and were read without reference to “specified”, wherever that term appears, or that was previously such a shareholder of the corporation; or

(2) a person that does not deal at arm’s length with the particular person; or

ii. the individual acquired a share of a person who is the individual’s spouse as part of a transfer referred to in section 454 of the Act and a valid election under the second paragraph of that section 454 was made by the individual’s spouse, with the result that the provisions of section 454 do not apply to the transfer.

For the purposes of the first paragraph, an individual who expressly or implicitly undertook to transfer or loan part or all of the proceeds of the disposition of a share is deemed to have made the transfer or loan at the time of the undertaking.

The individual referred to in subparagraph c of the first paragraph is required to disclose a specified transaction in relation to a transaction referred to in the first paragraph.

The obligation to disclose the specified transaction applies as of,

(a) if subparagraph i of subparagraph d of the first paragraph applies and:

i. the day of the transfer or loan is before the day on which the share referred to in subparagraph a of that paragraph is disposed of, the day of the disposition; or

ii. the day of the transfer or loan is the day on which the share referred to in subparagraph a of that paragraph is disposed of or is later than that day, the day of the transfer or loan; or

(b) if subparagraph ii of subparagraph d of the first paragraph applies, the day on which the share referred to in that subparagraph ii is acquired.

TRANSACTIONS 4

TAX ATTRIBUTE TRADING

The following transactions are hereby determined by the Minister:

(a) a transaction in relation to a tax attribute, contemplated by the definition of “attribute trading restriction” in section 21.4.2.1 of the Act, that is generated in respect of a taxpayer, referred to in this subparagraph as the “initial taxpayer”, other than a tax-exempt taxpayer, as part of the transaction or before the beginning of the transaction, if the transaction includes the following facts:

i. a particular taxpayer is subject to tax under Part I of the Act at a particular time in the transaction; and

ii. the particular taxpayer uses the tax attribute generated in respect of the initial taxpayer;

(b) a transaction in relation to a tax attribute, contemplated by the definition of “attribute trading restriction” in section 21.4.2.1 of the Act, that is generated in respect of a corporation or a trust, referred to in this subparagraph as the “specific taxpayer”, other than a tax-exempt taxpayer, as part of the transaction or before the beginning of the transaction, if the transaction includes the following facts:

i. a person or a partnership, referred to as the “purchaser” in this paragraph and in the fourth paragraph, acquires, directly or indirectly in any manner whatever:

(1) if the specific taxpayer is a corporation, a share of the capital stock of the specific taxpayer or a right referred to in paragraph b of section 20 of the Act relating to such a share; or

(2) if the specific taxpayer is a trust, a capital interest or an income interest in the specific taxpayer or a right, whether immediate or future and whether absolute or contingent, to such an interest;

ii. the specific taxpayer is subject to tax under Part I of the Act at a particular time in the transaction;

iii. the specific taxpayer uses the tax attribute;

iv. if the specific taxpayer carried on a business before the beginning of the transaction, any of the following conditions is met:

(1) the specific taxpayer ceases to carry on the business or begins to carry on a new business as part of the transaction;

(2) the specific taxpayer, in the course of the transaction, earns income from property the taxpayer acquired as part of the transaction, or held immediately before the beginning of the transaction and was not using to earn income from property at that time; or

(3) the specific taxpayer realizes a capital gain from the disposition of property acquired as part of the transaction;

v. the use of the tax attribute to which subparagraph iii refers is one of the results derived, directly or indirectly, from the acquisition by the purchaser of the share, the right to a share, an interest or the right to an interest referred to in subparagraph i, or from the transfer or loan of property to the specific taxpayer, as part of the transaction, by the purchaser or by a person or partnership with which the purchaser does not deal at arm’s length at the time of the transfer or loan.

For the purposes of subparagraph ii of subparagraph a of the first paragraph and subparagraph iii of subparagraph b of that paragraph, a taxpayer that is a member of a partnership that generates or uses a tax attribute is deemed to generate or use the tax attribute.

For the purposes of subparagraph a of the first paragraph, “tax-exempt taxpayer” means

(a) a taxpayer in respect of which section 21.0.6 of the Act applies in the course of the transaction in relation to the tax attribute referred to in that subparagraph a; and

(b) a taxpayer with which the particular taxpayer is affiliated throughout the period that begins immediately before the beginning of the transaction and ends at the time of the last use of the tax attribute in connection with the transaction.

For the purposes of subparagraph b of the first paragraph, “tax-exempt taxpayer” means:

(a) a taxpayer in respect of which section 21.0.6 of the Act applies in the course of the transaction in relation to the tax attribute referred to in that subparagraph b;

(b) a taxpayer with which each of the purchasers is affiliated throughout the period that begins immediately before the beginning of the transaction and ends at the time of the last use of the tax attribute in connection with the transaction.

For the purposes of subparagraph b of the third and fourth paragraphs, the following rules apply:

(a) a corporation, trust or partnership that is constituted or begins to exist, otherwise than by reason of an amalgamation or merger, at a particular time as part of the transaction is deemed to have existed throughout the period that begins immediately before the beginning of the transaction and ends at the time immediately preceding the particular time and to have had throughout that period the same shareholders, beneficiaries or members, as the case may be, as those it has at the particular time, those shareholders, beneficiaries or members being deemed to hold, throughout that period, the shares of the capital stock of the corporation, interests in the trust or in the partnership, as the case may be, they hold at the particular time;

(b) where, at a particular time, 2 or more particular corporations amalgamate or merge to form a new corporation and the new corporation and the particular corporations would have been affiliated with each other throughout the period that begins immediately before the beginning of the transaction and ends at the time immediately preceding the particular time, if, throughout that period, the new corporation had existed and had had the same shareholders as those it has at the particular time, the new corporation is deemed to have existed throughout that period and to have had, throughout that period, the same shareholders as those it has at the particular time, those shareholders being deemed to hold, throughout that period, the shares of the capital stock of the corporation they hold at the particular time;

(c) section 21.0.4 of the Act does not apply.

The particular taxpayer referred to in subparagraph a of the first paragraph is required to disclose a specified transaction in relation to a transaction referred to in that subparagraph a.

The specific taxpayer, within the meaning of subparagraph b of the first paragraph, is required to disclose a specified transaction that relates to a transaction referred to in that subparagraph b.

The obligation to disclose the specified transaction in relation to a transaction referred to in subparagraph a of the first paragraph applies as of the day that is 60 days before the particular taxpayer’s filing due-date for the first taxation year in respect of which the particular taxpayer uses the tax attribute referred to in that subparagraph a.

The obligation to disclose the specified transaction in relation to a transaction referred to in subparagraph b of the first paragraph applies as of the day that is 60 days before the specific taxpayer’s filing due-date for the first taxation year in respect of which the specific taxpayer uses the tax attribute referred to in that subparagraph b.

M.O. 2021-03-03, Sch. A; M.O. 2022-06-15, ss. 2, 3 and 4.

2021-03-17

SCHEDULE A

(ss. 1079.8.1 and 1079.8.6.3)

TRANSACTION 1

AVOIDANCE OF DEEMED DISPOSAL OF TRUST PROPERTY

A transaction that includes the following facts is hereby determined by the Minister:

(a) a trust is resident in Québec at any time in the course of the transaction;

(b) the trust holds at that time a particular property that is a capital property or land included in the inventory of a business of the trust;

(c) the particular property is not exempt property;

(d) at a particular time in the course of the transaction, the trust distributes the particular property and is deemed to dispose of it for proceeds of disposition that are less than its fair market value immediately before that time;

(e) the disposition referred to in subparagraph d results in the trust not being deemed to dispose of the particular property under section 653 of the Act at the end of a day described in any of subparagraphs a to c of the first paragraph of that section 653, nor to reacquire the particular property immediately after that day; and

(f) after the particular time referred to in subparagraph d, a trust holds, directly or indirectly, the particular property or another property whose fair market value is derived, directly or indirectly, from the particular property, or so holds property substituted for the particular property or for the other property, as the case may be.

A trust that is a party to a specified transaction in relation to a transaction referred to in the first paragraph is required to disclose the specified transaction.

The obligation to disclose the specified transaction applies as of the day that includes the particular time referred to in subparagraph d of the first paragraph.

TRANSACTION 2

PAYMENT TO A NON-TREATY COUNTRY

A transaction that includes the following facts is hereby determined by the Minister:

(a) a particular person or a particular partnership in respect of which any of the following conditions is met is a party to the transaction:

i. in the case of a person that is an individual or a trust, the person is resident in Québec at the end of a particular taxation year in which the transaction occurs;

ii. in the case of a person that is a corporation, the person has an establishment in Québec at any time in a particular taxation year in which the transaction occurs; or

iii. in the case of a partnership, each member of the partnership is required, under section 1086R78 of the Regulation respecting the Taxation Act (chapter I-3, r. 1), to file an information return for a particular fiscal period of the partnership in which the transaction occurs;

(b) the transaction relates, in any manner whatever, to a business carried on in Québec by the particular person in the course of the particular taxation year, except a business the person carries on as a member of a partnership, or by the particular partnership in the particular fiscal period;

(c) another person that is not resident in Canada and with whom the particular person or the particular partnership or a member of the particular partnership, as the case may be, does not deal at arm’s length in the particular taxation year or particular fiscal period, as the case may be, or another partnership of which such other person is a member, is a party to the transaction, if

i. the other person at any time in the particular taxation year is resident in a country with which the Government of Québec or of Canada at that time has not entered into a tax agreement; or

ii. the other partnership at any time in the particular fiscal period carries on a business in a country with which the Government of Québec or of Canada at that time has not entered into a tax agreement; and

(d) the particular person or the particular partnership deducts in computing income under Part I of the Act for the particular taxation year or particular fiscal period, as the case may be, a total amount of not less than $1,000,000 relating to amounts each of which is paid or payable to the other person or other partnership referred to in subparagraph c, other than an amount paid or payable as consideration for the acquisition of corporeal property.

For the purposes of subparagraph c of the first paragraph, a person resident in a dependency, possession, department, protectorate or region of a country with which the Government of Québec or of Canada has entered into a tax agreement and to which the provisions of the tax agreement do not apply is considered to be resident in a country with which the Government of Québec or of Canada has not entered into a tax agreement.

For the purposes of the first paragraph, a person that is a member of a partnership that itself is a member of another partnership is deemed to be a member of that other partnership.

The particular person or the members of the particular partnership are required to disclose a specified transaction in relation to a transaction referred to in the first paragraph.

The obligation to disclose the specified transaction applies as of the day that is 60 days before the particular person’s filing due-date for the person’s particular taxation year or before the filing due-date of the member of the particular partnership for the member’s taxation year in which the particular fiscal period ends, as the case may be.

TRANSACTION 3

MULTIPLICATION OF THE CAPITAL GAINS DEDUCTION

A transaction that includes the following facts is hereby determined by the Minister:

(a) an individual subject to tax under Part I of the Act or a trust under which the individual is a beneficiary disposes of a share of the capital stock of a Canadian-controlled private corporation;

(b) the share is a qualified small business corporation share;

(c) in respect of the disposition, the individual deducts an amount under section 726.7.1 of the Act in computing taxable income for a taxation year; and

(d) either of the following conditions is met:

i. the individual transfers or loans, directly or indirectly, in any manner whatever, including by means of a trust or a corporation, or by repayment of existing indebtedness, an amount that may reasonably be considered to be, directly or indirectly, part or all of the proceeds of the disposition of the share, to either

(1) a particular person that is a shareholder of the corporation referred to in subparagraph a or would be such a shareholder if section 21.18 of the Act applied and were read without reference to “specified”, wherever that term appears, or that was previously such a shareholder of the corporation; or

(2) a person that does not deal at arm’s length with the particular person; or

ii. the individual acquired a share of a person who is the individual’s spouse as part of a transfer referred to in section 454 of the Act and a valid election under the second paragraph of that section 454 was made by the individual’s spouse, with the result that the provisions of section 454 do not apply to the transfer.

For the purposes of the first paragraph, an individual who expressly or implicitly undertook to transfer or loan part or all of the proceeds of the disposition of a share is deemed to have made the transfer or loan at the time of the undertaking.

An individual referred to in the first paragraph is required to disclose a specified transaction in relation to a transaction referred to in the first paragraph.

The obligation to disclose the specified transaction applies as of,

(a) if the day of the transfer or loan referred to in subparagraph i of subparagraph d of the first paragraph is before the day on which the share referred to in subparagraph a of that paragraph is disposed of, the day of the disposition; or

(b) if the day of the transfer or loan referred to in subparagraph i of subparagraph d of the first paragraph is the day on which the share referred to in subparagraph a of that paragraph is disposed of or is later than that day, the day of the transfer or loan.

TRANSACTIONS 4

TAX ATTRIBUTE TRADING

The following transactions are hereby determined by the Minister:

(a) a transaction in relation to a tax attribute, contemplated by the definition of “attribute trading restriction” in section 21.4.2.1 of the Act, that is generated in respect of a taxpayer, referred to in this subparagraph as the “initial taxpayer”, other than a tax-exempt taxpayer, as part of the transaction or before the beginning of the transaction, if the transaction includes the following facts:

i. a particular taxpayer is subject to tax under Part I of the Act at a particular time in the transaction; and

ii. the particular taxpayer uses the tax attribute generated in respect of the initial taxpayer;

(b) a transaction in relation to a tax attribute, contemplated by the definition of “attribute trading restriction” in section 21.4.2.1 of the Act, that is generated in respect of a corporation or a trust, referred to in this subparagraph as the “specific taxpayer”, other than a tax-exempt taxpayer, as part of the transaction or before the beginning of the transaction, if the transaction includes the following facts:

i. a person or a partnership acquires,

(1) if the specific taxpayer is a corporation, a share of the capital stock of the specific taxpayer or a right referred to in paragraph b of section 20 of the Act relating to such a share; or

(2) if the specific taxpayer is a trust, a capital interest or an income interest in the specific taxpayer or a right, whether immediate or future and whether absolute or contingent, to such an interest;

ii. the specific taxpayer is subject to tax under Part I of the Act at a particular time in the transaction;

iii. the specific taxpayer uses the tax attribute;

iv. if the specific taxpayer carried on a business prior to the beginning of the transaction, either, or both, of the following conditions are met:

(1) the specific taxpayer ceases to carry on the business in the course of the transaction; or

(2) the specific taxpayer begins to carry on a new business in the course of the transaction; and

v. the use of the tax attribute to which subparagraph iii refers is one of the results derived, directly or indirectly, from the acquisition by the person or the partnership of the share, the right to a share, an interest or the right to an interest referred to in subparagraph i.

For the purposes of subparagraph ii of subparagraph a of the first paragraph and subparagraph iii of subparagraph b of that paragraph, a taxpayer that is a member of a partnership that generates or uses a tax attribute is deemed to generate or use the tax attribute.

For the purposes of subparagraph a of the first paragraph, “tax-exempt taxpayer” means

(a) a taxpayer in respect of whom section 21.4.2.3 of the Act applies in relation to the tax attribute referred to in that subparagraph a; and

(b) a taxpayer with whom the particular taxpayer is affiliated.

For the purposes of subparagraph b of the first paragraph, “tax-exempt taxpayer” means a taxpayer in respect of whom section 21.4.2.3 of the Act applies in relation to the tax attribute referred to in that subparagraph b.

The particular taxpayer referred to in subparagraph a of the first paragraph is required to disclose a specified transaction in relation to a transaction referred to in that subparagraph a.

The specific taxpayer, within the meaning of subparagraph b of the first paragraph, is required to disclose a specified transaction that relates to a transaction referred to in that subparagraph b.

The obligation to disclose the specified transaction in relation to a transaction referred to in subparagraph a of the first paragraph applies as of the day that is 60 days before the particular taxpayer’s filing due-date for the first taxation year in respect of which the particular taxpayer uses the tax attribute referred to in that subparagraph a.

The obligation to disclose the specified transaction in relation to a transaction referred to in subparagraph b of the first paragraph applies as of the day that is 60 days before the specific taxpayer’s filing due-date for the first taxation year in respect of which the specific taxpayer uses the tax attribute referred to in that subparagraph b.

M.O. 2021-03-03, Sch. A.

Not in force

SCHEDULE A

(ss. 1079.8.1 and 1079.8.6.3)

TRANSACTION 1

AVOIDANCE OF DEEMED DISPOSAL OF TRUST PROPERTY

A transaction that includes the following facts is hereby determined by the Minister:

(a) a trust is resident in Québec at any time in the course of the transaction;

(b) the trust holds at that time a particular property that is a capital property or land included in the inventory of a business of the trust;

(c) the particular property is not exempt property;

(d) at a particular time in the course of the transaction, the trust distributes the particular property and is deemed to dispose of it for proceeds of disposition that are less than its fair market value immediately before that time;

(e) the disposition referred to in subparagraph d results in the trust not being deemed to dispose of the particular property under section 653 of the Act at the end of a day described in any of subparagraphs a to c of the first paragraph of that section 653, nor to reacquire the particular property immediately after that day; and

(f) after the particular time referred to in subparagraph d, a trust holds, directly or indirectly, the particular property or another property whose fair market value is derived, directly or indirectly, from the particular property, or so holds property substituted for the particular property or for the other property, as the case may be.

A trust that is a party to a specified transaction in relation to a transaction referred to in the first paragraph is required to disclose the specified transaction.

The obligation to disclose the specified transaction applies as of the day that includes the particular time referred to in subparagraph d of the first paragraph.

TRANSACTION 2

PAYMENT TO A NON-TREATY COUNTRY

A transaction that includes the following facts is hereby determined by the Minister:

(a) a particular person or a particular partnership in respect of which any of the following conditions is met is a party to the transaction:

i. in the case of a person that is an individual or a trust, the person is resident in Québec at the end of a particular taxation year in which the transaction occurs;

ii. in the case of a person that is a corporation, the person has an establishment in Québec at any time in a particular taxation year in which the transaction occurs; or

iii. in the case of a partnership, each member of the partnership is required, under section 1086R78 of the Regulation respecting the Taxation Act (chapter I-3, r. 1), to file an information return for a particular fiscal period of the partnership in which the transaction occurs;

(b) the transaction relates, in any manner whatever, to a business carried on in Québec by the particular person in the course of the particular taxation year, except a business the person carries on as a member of a partnership, or by the particular partnership in the particular fiscal period;

(c) another person that is not resident in Canada and with whom the particular person or the particular partnership or a member of the particular partnership, as the case may be, does not deal at arm’s length in the particular taxation year or particular fiscal period, as the case may be, or another partnership of which such other person is a member, is a party to the transaction, if

i. the other person at any time in the particular taxation year is resident in a country with which the Government of Québec or of Canada at that time has not entered into a tax agreement; or

ii. the other partnership at any time in the particular fiscal period carries on a business in a country with which the Government of Québec or of Canada at that time has not entered into a tax agreement; and

(d) the particular person or the particular partnership deducts in computing income under Part I of the Act for the particular taxation year or particular fiscal period, as the case may be, a total amount of not less than $1,000,000 relating to amounts each of which is paid or payable to the other person or other partnership referred to in subparagraph c, other than an amount paid or payable as consideration for the acquisition of corporeal property.

For the purposes of subparagraph c of the first paragraph, a person resident in a dependency, possession, department, protectorate or region of a country with which the Government of Québec or of Canada has entered into a tax agreement and to which the provisions of the tax agreement do not apply is considered to be resident in a country with which the Government of Québec or of Canada has not entered into a tax agreement.

For the purposes of the first paragraph, a person that is a member of a partnership that itself is a member of another partnership is deemed to be a member of that other partnership.

The particular person or the members of the particular partnership are required to disclose a specified transaction in relation to a transaction referred to in the first paragraph.

The obligation to disclose the specified transaction applies as of the day that is 60 days before the particular person’s filing due-date for the person’s particular taxation year or before the filing due-date of the member of the particular partnership for the member’s taxation year in which the particular fiscal period ends, as the case may be.

TRANSACTION 3

MULTIPLICATION OF THE CAPITAL GAINS DEDUCTION

A transaction that includes the following facts is hereby determined by the Minister:

(a) an individual subject to tax under Part I of the Act or a trust under which the individual is a beneficiary disposes of a share of the capital stock of a Canadian-controlled private corporation;

(b) the share is a qualified small business corporation share;

(c) in respect of the disposition, the individual deducts an amount under section 726.7.1 of the Act in computing taxable income for a taxation year; and

(d) either of the following conditions is met:

i. the individual transfers or loans, directly or indirectly, in any manner whatever, including by means of a trust or a corporation, or by repayment of existing indebtedness, an amount that may reasonably be considered to be, directly or indirectly, part or all of the proceeds of the disposition of the share, to either

(1) a particular person that is a shareholder of the corporation referred to in subparagraph a or would be such a shareholder if section 21.18 of the Act applied and were read without reference to “specified”, wherever that term appears, or that was previously such a shareholder of the corporation; or

(2) a person that does not deal at arm’s length with the particular person; or

ii. the individual acquired a share of a person who is the individual’s spouse as part of a transfer referred to in section 454 of the Act and a valid election under the second paragraph of that section 454 was made by the individual’s spouse, with the result that the provisions of section 454 do not apply to the transfer.

For the purposes of the first paragraph, an individual who expressly or implicitly undertook to transfer or loan part or all of the proceeds of the disposition of a share is deemed to have made the transfer or loan at the time of the undertaking.

An individual referred to in the first paragraph is required to disclose a specified transaction in relation to a transaction referred to in the first paragraph.

The obligation to disclose the specified transaction applies as of,

(a) if the day of the transfer or loan referred to in subparagraph i of subparagraph d of the first paragraph is before the day on which the share referred to in subparagraph a of that paragraph is disposed of, the day of the disposition; or

(b) if the day of the transfer or loan referred to in subparagraph i of subparagraph d of the first paragraph is the day on which the share referred to in subparagraph a of that paragraph is disposed of or is later than that day, the day of the transfer or loan.

TRANSACTIONS 4

TAX ATTRIBUTE TRADING

The following transactions are hereby determined by the Minister:

(a) a transaction in relation to a tax attribute, contemplated by the definition of “attribute trading restriction” in section 21.4.2.1 of the Act, that is generated in respect of a taxpayer, referred to in this subparagraph as the “initial taxpayer”, other than a tax-exempt taxpayer, as part of the transaction or before the beginning of the transaction, if the transaction includes the following facts:

i. a particular taxpayer is subject to tax under Part I of the Act at a particular time in the transaction; and

ii. the particular taxpayer uses the tax attribute generated in respect of the initial taxpayer;

(b) a transaction in relation to a tax attribute, contemplated by the definition of “attribute trading restriction” in section 21.4.2.1 of the Act, that is generated in respect of a corporation or a trust, referred to in this subparagraph as the “specific taxpayer”, other than a tax-exempt taxpayer, as part of the transaction or before the beginning of the transaction, if the transaction includes the following facts:

i. a person or a partnership acquires,

(1) if the specific taxpayer is a corporation, a share of the capital stock of the specific taxpayer or a right referred to in paragraph b of section 20 of the Act relating to such a share; or

(2) if the specific taxpayer is a trust, a capital interest or an income interest in the specific taxpayer or a right, whether immediate or future and whether absolute or contingent, to such an interest;

ii. the specific taxpayer is subject to tax under Part I of the Act at a particular time in the transaction;

iii. the specific taxpayer uses the tax attribute;

iv. if the specific taxpayer carried on a business prior to the beginning of the transaction, either, or both, of the following conditions are met:

(1) the specific taxpayer ceases to carry on the business in the course of the transaction; or

(2) the specific taxpayer begins to carry on a new business in the course of the transaction; and

v. the use of the tax attribute to which subparagraph iii refers is one of the results derived, directly or indirectly, from the acquisition by the person or the partnership of the share, the right to a share, an interest or the right to an interest referred to in subparagraph i.

For the purposes of subparagraph ii of subparagraph a of the first paragraph and subparagraph iii of subparagraph b of that paragraph, a taxpayer that is a member of a partnership that generates or uses a tax attribute is deemed to generate or use the tax attribute.

For the purposes of subparagraph a of the first paragraph, “tax-exempt taxpayer” means

(a) a taxpayer in respect of whom section 21.4.2.3 of the Act applies in relation to the tax attribute referred to in that subparagraph a; and

(b) a taxpayer with whom the particular taxpayer is affiliated.

For the purposes of subparagraph b of the first paragraph, “tax-exempt taxpayer” means a taxpayer in respect of whom section 21.4.2.3 of the Act applies in relation to the tax attribute referred to in that subparagraph b.

The particular taxpayer referred to in subparagraph a of the first paragraph is required to disclose a specified transaction in relation to a transaction referred to in that subparagraph a.

The specific taxpayer, within the meaning of subparagraph b of the first paragraph, is required to disclose a specified transaction that relates to a transaction referred to in that subparagraph b.

The obligation to disclose the specified transaction in relation to a transaction referred to in subparagraph a of the first paragraph applies as of the day that is 60 days before the particular taxpayer’s filing due-date for the first taxation year in respect of which the particular taxpayer uses the tax attribute referred to in that subparagraph a.

The obligation to disclose the specified transaction in relation to a transaction referred to in subparagraph b of the first paragraph applies as of the day that is 60 days before the specific taxpayer’s filing due-date for the first taxation year in respect of which the specific taxpayer uses the tax attribute referred to in that subparagraph b.

M.O. 2021-03-03, Sch. A.